Targacept (NASDAQ:TRGT) is slashing its workforce by nearly half, part of a restructuring plan that comes one month after its lead drug candidate, a depression drug, failed the last of a series of phase 3 clinical trials.

The company is laying off 65 employees, approximately 46 percent of its staff. Also departing the company will be chief medical officer Geoffrey Dunbar, who will retire from the Winston-Salem-based Targacept at the end of May.

The restructuring and layoffs don’t come as a surprise. When Targacept’s lead drug failed it final phase 3 study last month, the company signaled that corporate changes were coming. Layoffs are expected to be completed by June 30, Targacept said in a securities filing. All affected employees will receive severance pay and benefits. The company is also providing to them outplacement services. Targacept said in the regulatory filing that reducing headcount will save approximately $12.9 million in cash operating expenses going forward; one-time restructuring costs are expected to be $2.4 million and will be recorded in the second quarter.

Targacept had high hopes for drug candidate TC-5214, a compound that the company and drug partner AstraZeneca (NYSE:AZN), were studying as a depression treatment for those who do not respond adequately to the first line of depression drugs. But TC-5214 failed to perform statistically better than a placebo in study results released last November, and the compound went on to fail in three subsequent phase 3 trials.

With the restructuring, Targacept plans to shift its focus to its other clinical programs and select preclinical compounds. But since TC-5214′s failure, some of the remaining parts of Targacept’s drug pipeline have done little to inspire confidence. The company last month released phase 2 results on TC-6987, a compound being studied for diabetes and separately for asthma. The compound failed as a diabetes treatment, but Targacept said it showed promise as an asthma treatment. But later, the company said that reanalysis of the data showed the compound actually hit just one of the two targets in the clinical trial. Targacept’s other clinical programs include candidates in schizophrenia and Alzheimer’s disease; the latter candidate being developed in partnership with AstraZeneca.

“This painful step is part of an overall plan to align our resources more closely with nearer-term value creation opportunities,” CEO Donald deBethizy said in a statement. “We remain well capitalized and focused on operating our business efficiently to ensure we are positioned to exploit our diverse clinical-stage pipeline to bring new medicines to patients.”

Targacept, which does not yet have any U.S. Food and Drug Administration-approved products, currently has more than $220 million in cash and investments in marketable securities. The company will issue new guidance with the release of its financial results for the first quarter scheduled for May 3